Financial Data and Key Metrics Changes - Second quarter revenue was $148 million, reflecting a 2% decrease compared to 2024, but organic growth was 6% when adjusting for the divestiture of the Advanced Rehabilitation business [19][21] - Adjusted earnings per share increased by 31% to $0.21, while adjusted EBITDA margin was 23%, indicating strong gross margin stability [8][22] - Adjusted net income rose 45% to $18 million, driven by lower interest expenses and reduced employee equity-based compensation [23] Business Line Data and Key Metrics Changes - Surgical Solutions revenue grew by 11%, with strong double-digit growth in Ultrasonics [21] - Restorative Therapies experienced a 32% decrease in revenue due to the divestiture, but organic growth was 11% when excluding this impact [22] - Pain Treatments revenue increased by 1%, with organic growth estimated at 4% to 5% [21][36] Market Data and Key Metrics Changes - International segment revenue increased by 12%, with organic growth climbing 24% [22] - The pain treatment market is expected to grow above 20% annually in the US, with a total addressable market of approximately $2 billion [12] Company Strategy and Development Direction - The company aims to drive above-market revenue growth, expand profitability, and accelerate free cash flow generation [8][18] - Focus on expanding the PNS market with the recent clearance of StimTrial and Telesman, which are expected to generate significant revenue [12][15] - Plans for a limited commercial release of new products in the third quarter, with broader rollout expected in early 2026 [15][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year revenue and adjusted EBITDA guidance, despite challenges from foreign exchange and tariffs [28][29] - The company is well-positioned for sustained growth, with expectations for cash flow from operations to nearly double compared to the previous year [24][25] Other Important Information - The company was recognized as one of the top 10 companies to work for in North Carolina, highlighting positive employee engagement [18] - Recent refinancing of credit facilities improved liquidity and reduced annual interest expenses [27] Q&A Session Summary Question: Can you remind us what growth would have been year over year on an organic basis if not for that favorable rebate adjustment in 2Q 2024? - Management indicated that normalized growth would be around 4% to 5% [32][33] Question: What was the volume growth for Duralane in the quarter? - Management noted that Duralane continues to be a strong driver, with performance slightly above market growth in the mid-single digits [36] Question: What was BGS growth in the quarter? - BGS experienced high single-digit growth in the second quarter, with expectations for continued acceleration [40][42] Question: Can you provide more color on Exagen's strength in the quarter? - Growth in Exagen was attributed to improved commercial effectiveness and stronger execution from the sales team [48][50] Question: What are the expectations for R&D spending in the future? - R&D investment is expected to ramp up as the company focuses on expanding its Ultrasonics and PNS platforms [56][58] Question: What drove the increase in tariff expectations? - The expected tariff impact increased to approximately $3 million, primarily affecting the back half of the year [67][68]

Financial Data and Key Metrics Changes - The company reported revenue of $154 million for the fourth quarter, representing a 14% increase year-over-year [31] - Adjusted EBITDA for the fourth quarter was over $28 million, reflecting a 28% increase compared to the prior year [31] - Adjusted gross margin expanded by 230 basis points to 74% [35] - Adjusted net income more than doubled to $13 million, with adjusted earnings per share at $0.15 for the quarter [36] Business Line Data and Key Metrics Changes - Surgical Solutions revenue accelerated by 18%, with Ultrasonics achieving over 20% growth for the second consecutive quarter [31][32] - Pain Treatments revenue increased by 17%, driven by DUROLANE's strong brand recognition and clinical differentiation [32] - Restorative Therapies sales were flat year-over-year, with growth in Exogen offset by a decline in advanced rehabilitation [34] - Bone Graft Substitutes are expected to return to double-digit growth in the second half of 2025 [32] Market Data and Key Metrics Changes - The International segment grew by 11% compared to the prior year, benefiting from delayed shipments in the Ultrasonics business [35] - The overall market for the company's products is growing at low to mid-single digits, while the company expects to achieve above-market growth [21] Company Strategy and Development Direction - The company aims to drive above-market revenue growth, expand profitability, and accelerate free cash flow generation in 2025 [20] - A comprehensive review of all markets has established a framework for sustained and profitable growth, aligning the organization around a common vision [11] - The company is focusing on strategic marketing, commercial effectiveness, and medical education to raise awareness about its technology [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to build on positive momentum and deliver above-market growth [9] - The company is optimistic about the Bone Graft Substitutes business, expecting increased productivity from existing distributors and onboarding new customers [62] - Management highlighted the importance of maintaining focus on core business areas while exploring international expansion opportunities [80] Other Important Information - The company paid down nearly $50 million in debt during the fourth quarter, reducing its net leverage ratio to slightly above 3 turns [19] - For 2025, the company expects net sales in the range of $560 million to $570 million, reflecting organic growth of approximately 6% to 8% [40] Q&A Session Summary Question: Can you walk through the guidance assumptions by segment in '25? - Management confirmed expectations of mid- to high single digits in pain treatments, low double digits in surgical, and low single digits in restorative therapies [48] Question: How should we think about HA and DUROLANE performance in 2025? - Management expects HA growth to be driven by volume, with stable pricing, and anticipates above-market growth for DUROLANE [51][52] Question: When should investors expect capital allocation priorities to shift? - Management indicated that as debt is reduced, there will be increased financial flexibility to pursue strategic opportunities [56] Question: How are you thinking about the Bone Graft Substitute business trending this year? - Management expressed confidence in overcoming previous supply challenges and expects double-digit growth in the back half of 2025 [62] Question: Can you discuss trends in the Exogen business? - Management noted that Exogen has stabilized and is expected to grow in the low to mid-single digits, with a focus on maintaining growth momentum [68] Question: How will you drive OUS expansion in 2025 and beyond? - Management plans to be targeted in geographic expansion and is optimistic about international growth opportunities [80]